Syndicate content

access to finance

Measuring Access to Finance…One Step at a Time

Asli Demirgüç-Kunt's picture

How well do financial systems in different countries serve households and enterprises?  Who has access to which financial services – such as savings, loans, payments, insurance?  Just how limited is access?

Just a short while ago, we didn’t know the answer to these questions.  But modern development theories very much emphasize that broad financial access is the key to development.  Lack of access to finance is often the critical element underlying persistent income inequality as well as slower growth.  Without inclusive financial systems, poor individuals and small enterprises need to rely on their personal wealth or internal resources to invest in their education, become entrepreneurs, and make their businesses grow.  So it was disappointing that although data on the financial sector have been readily available, data on access simply were not.

Those of us who spend our days trying to find ways of influencing policy decisions know that one of the most effective ways of focusing policy attention on an issue is by measurement.  If you can measure something and “benchmark” it with useful comparisons, you are one step closer to identifying what needs to be done.  And if you can provide these measurements at regular intervals, you are more likely to capture the attention of policymakers, promote policy change, and track and evaluate the impact of such policies. A team at the World Bank began thinking about this issue in the beginning of this decade, so when the UN announced 2005 as the Year of Microcredit, we were more than ready to rise to the challenge. 

Pages